Looks Like $800 Billion Doesn’t Go As Far As It Used To

In previous Blog entries, we’ve discussed the effectiveness of the political process at a National level. Regardless of whether you agreed or disagreed with my comments, it might be beneficial to look at what has transpired over the past seven weeks and see if there are some lessons we can take away from this fiasco. Why is this important? Because many of the politicians who contributed to this fiasco are still in office and they could have a hand in shaping transportation legislation that will affect corporate supply chains.

The first lesson is that actions have consequences. It’s generally agreed that one of the principal reasons for the mortgage meltdown is the pressure put on banks to comply with the provisions of the Community Reinvestment Act (CRA), enacted by Congress in 1977, and subsequently modified in 1995 and 1999. There is not enough space to discuss the full implications of this legislation, but many of our financial institutions, bowing to the threat of political retribution, threw common sense out the door and made loans to people who had no prayer of ever repaying them. Obviously, you can’t keep doing this forever. In this game of financial musical chairs, somebody is going to be left standing when the music stops. That somebody is the United States Taxpayer.

The second lesson is that ultimately we’re all going to have to pay a price to get this economy back on solid footing. The imperative to get reelected means that most politicians will tell the voters what they want to hear instead of telling them what needs to be done. Look, if you have a heart attack and you want to live, you’re going to have to get surgery, change your diet and eat better. But our “political doctors” continue to deny reality and tell their patients (the taxpayers) that they don’t need surgery, don’t need to exercise and can eat whatever they want. In other words, we can continue to afford the massive growth in entitlement programs and add new, costly programs such as Universal Health Care. On top of that, even though approximately 40% of the people in this country don’t pay any Federal Income Tax, according to the President–elect, 95% of the voters will get a “tax cut.” And don’t forget, by the way, the Billions of dollars in bailout money that the automakers are seeking. This isn’t a democratic or republican issue; it has everything to do with the reality that instead of calling for everyone to sacrifice for the good of this country, our politicians continue to live in Fantasyland!

The third lesson is that “flying by the seat of our pants” isn’t an effective policy for handling a crisis. Watching the performance of Secretary Paulson, and our Senate and Congressional leaders has been frightening. Recently a leader in the Banking Community stated that $800 Billion wasn’t going to put a dent in fixing the problem. He stated that this financial crisis will cost between TWO to THREE TRILLION DOLLARS. That’s a lot of money! That is why the following story from last week is stunning: “The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Bernake and Treasury Secretary Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later … Americans have no idea where their money is going or what securities the banks are pledging in return.” Like I said, we are flying by the seat of our pants.

What does all this have to do with logistics and supply chain issues? As noted earlier, many of the politicians who brought you this financial mess are going to be weighing in on transportation issues affecting your supply chain. And what no one wants to admit, or talk about is that there are several transportation issues that are nearing the crisis phase. What type of issues?

Most people would agree that at the top of the list is the condition of our national transportation infrastructure. The current highway bill costs about $285 Billion. AASHTO and our political leaders are stating that at a minimum, the 2009 Highway Bill should be well over $500 Billion. Great idea, except the Highway Trust Fund is broke; Congress had to do an emergency $8 Billion appropriation in order for it to meet its current obligations. So how are we going to pay for this $500 Billion Bill?

The incoming Congress is likely to put increased emphasis on security measures at our ports and borders. With new people at the Department of Homeland Security, it will be interesting to see how the 10+2 measures get implemented. And if there are new “Scan All” security measures that look anything like what Representative Markey has called for in the past, you’d better talk to your CEO and CFO because you’re going to be needing a lot more inventory to compensate for increased lead times. Additionally, the following question needs to be answered: Who is going to pay for the cost to implement all these security measures?

Unfortunately, space dictates that I close. But this is just the tip of the iceberg. For fun, we could talk about the revisions to the Lacey Act, the Hours of Service debate, or … well, it’s too discouraging to go on. But hopefully, shippers, carriers and Third Parties will wake up and realize that organizations such as the NIT League, NASSTRAC, AST&L, TIA, ATA, and CSCMP need their support in order to have a voice in the political process. As a long time member of many of these organizations, I’m inspired by the fact that the same individuals volunteer their time year after year to work on behalf of issues that are important to the transportation industry.

It would be great to see more transportation professionals take the challenge to get out of the stands seriously and get in the game where the action is occurring.  You might want to call it an $800 Billion Dollar invitation! And just in case you need further encouragement, let me offer the following from George Washington, "It should be the highest ambition of every American to extend his views beyond himself, and to bear in mind that his conduct will not only affect himself, his country, and his immediate posterity; but that its influence may be co-extensive with the world, and stamp political happiness or misery on ages yet unborn."

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